REG - Enwell Energy PLC - 2025 INTERIM RESULTS
Today 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250930:nRSd2948Ba&default-theme=true
RNS Number : 2948B Enwell Energy PLC 30 September 2025
30 September 2025
ENWELL ENERGY PLC
2025 INTERIM RESULTS
Enwell Energy plc ("Enwell Energy" or the "Company", and together with its
subsidiaries, the "Group"), the AIM-quoted (AIM: ENW) oil and gas exploration
and production group, is pleased to announce its unaudited results for the six
month period ended 30 June 2025.
Highlights
Operational
· Aggregate average daily production of 1,865 boepd (1H 2024: 2,077 boepd) (in
each case calculated on the days when the Group's fields were actually in
production)
· Aggregate production volumes for the period of 48,962 boe (1H 2024: 377,968
boe)
Financial
· Revenue of $3.4 million (1H 2024: $23.7 million), down 86% primarily as a
result of the suspension of production early in the period
· Gross profit of $1.4 million (1H 2024: $15.5 million), down 91%
· Operating profit of $1.0 million (1H 2024: $16.9 million), down 94%
predominantly as a result of the suspension of production early in the period
· Net loss of $1.4 million (1H 2024: $12.6 million profit)
· Cash and cash equivalents of $100.7 million as at 30 June 2025 (30 June 2024:
$93.7 million), and of $100.2 million as at 22 September 2025
· Average realised gas and condensate prices in Ukraine were $377/Mm(3)
(UAH15,836/Mm(3)) and $63/bbl respectively, with no LPG produced in the period
(1H 2024: $306/Mm(3) (UAH11,919/Mm(3)) gas, $74/bbl condensate and $149/boe
LPG)
Outlook
· The Russian invasion of Ukraine in February 2022 has had and continues to have
a significant impact on all aspects of life in Ukraine, including the Group's
business and operations. The scale and duration of disruption to the Group's
business continues to be difficult to predict, and there remains significant
uncertainty about the outcome of the war in Ukraine
· In November 2024, the Ukrainian authorities issued orders to suspend the
MEX-GOL, SV and VAS production licences for a period of ten years, and
consequently all work at these licences is currently suspended. This followed
similar regulatory action against the Group in April and May 2023, when the
VAS production licence and SC exploration licence were suspended from May 2023
until June 2024
· Further work on the MEX-GOL, SV and VAS licences will remain suspended until
there is a resolution of the regulatory issues, including the lifting of the
suspension orders
· The Group is continuing to pursue legal proceedings to challenge the
suspension orders, including investigating the possibility of seeking further
interim measures to allow restoration of its operations at the MEX-GOL, SV and
VAS fields
· The Group has also commenced arbitration proceedings under the bilateral
investment treaty between the United Kingdom and Ukraine
· At the SC exploration licence area, planning for the development of the
licence area is continuing
· Currently, the Group retains a significant proportion of its cash outside
Ukraine, which enhances the Group's ability to navigate the current risk
environment for the foreseeable future, and provides a material buffer to any
further disruptions to the Group's operations
· The Group's limited development programme for the remainder of 2025 and 2026
is expected to be funded from its existing cash resources and operational cash
flow
Oleksiy Zayets, CEO, commented: "The regulatory action taken by the Ukrainian
authorities in November 2024 resulting in the ongoing suspensions of our
MEX-GOL, SV and VAS production licences is very disappointing at a time when
Ukraine is in need of hydrocarbon production to support its energy needs. We
are endeavouring to find a resolution of these issues with the Ukrainian
Government and hope that progress can be made towards such a resolution. These
endeavours include, in August 2025, the Group commencing arbitration
proceedings against Ukraine under the Agreement Between the Government of the
United Kingdom of Great Britain and Northern Ireland and the Government of
Ukraine for the Promotion and Reciprocal Protection of Investments."
This announcement contains inside information for the purposes of Article 7 of
EU Regulation No. 596/2014, which forms part of United Kingdom domestic law by
virtue of the European Union (Withdrawal) Act 2018, as amended by virtue of
the Market Abuse (Amendment) (EU Exit) Regulations 2019.
For further information, please contact:
Enwell Energy plc Tel: 020 3427 3550
Chuck Valceschini, Chairman
Oleksiy Zayets, Chief Executive Officer
Bruce Burrows, Finance Director
Strand Hanson Limited Tel: 020 7409 3494
Rory Murphy / Matthew Chandler
Zeus Capital Limited Tel: 020 7614 5900
Oscar Stack (Corporate Finance)
Simon Johnson (Corporate Broking)
Citigate Dewe Rogerson Tel: 020 7638 9571
Luna Habte
Dr Gehrig Schultz, BSc Geophysical Engineering, PhD Geophysics, Member of the
European Association of Geophysical Engineers, Member of the Executive
Coordinating Committee of the Continental European Energy Council, and a
Non-Executive Director of the Company, has reviewed and approved the technical
information contained within this announcement in his capacity as a qualified
person, as required under the AIM Rules for Companies.
Definitions/Glossary
bbl barrel
bbl/d barrels per day
boe barrels of oil equivalent
boepd barrels of oil equivalent per day
Company Enwell Energy plc
€ Euro
GDP gross domestic product
Group Enwell Energy plc and its subsidiaries
km kilometre
km(2) square kilometre
LPG liquefied petroleum gas
MEX-GOL Mekhediviska-Golotvshinska
m(3) cubic metres
Mm³ thousand cubic metres
MMboe million barrels of oil equivalent
MMscf million scf
MMscf/d million scf per day
% per cent.
QHSE quality, health, safety and environment
SC Svystunivsko-Chervonolutskyi
scf standard cubic feet measured at 20 degrees Celsius and one atmosphere
SV Svyrydivske
$ United States Dollar
UAH Ukrainian Hryvnia
VAS Vasyschevskoye
VED Vvdenska
Chairman's Statement
I present the Group's results for the first half of 2025, which reflect the
very challenging situation in respect of the Group's business in Ukraine. The
ongoing war in Ukraine presents a very difficult operating environment and
worrying outlook, and I am greatly saddened by the terrible events occurring
there.
The war has had a significant impact on all aspects of life in Ukraine,
including the Group's business and operations. The overall scale and duration
of future disruption to the Group's business continues to be difficult to
predict, and there remains significant uncertainty about the outcome of the
war.
In November 2024, the MEX-GOL, SV and VAS production licences were suspended
by the Ukrainian authorities. The Group commenced legal proceedings in Ukraine
to challenge these suspensions, which resulted in interim rulings to
temporarily lift the suspensions, but unfortunately, the interim rulings in
respect of the MEX-GOL and SV licences were overturned in January 2025 and in
respect of the VAS licence in February 2025. Consequently, all operational
activity is currently suspended at these licences.
In August 2025, the Group commenced arbitration proceedings against Ukraine
under the Agreement Between the Government of the United Kingdom of Great
Britain and Northern Ireland and the Government of Ukraine for the Promotion
and Reciprocal Protection of Investments (the "Treaty"). The Treaty is an
international treaty designed to protect the rights of investors from the
United Kingdom or Ukraine who make investments in the other country. Within
the arbitration proceedings, the Company is claiming monetary damages for the
loss and damage it has suffered as a result of Ukraine's actions, as well as
the reinstatement of the MEX-GOL, SV and VAS production licences for the
remainder of their respective durations, and its costs.
Notwithstanding the war and the Ukrainian authorities regulatory actions,
during the first half of 2025, the Group continued with development of the SC
exploration licence area, which includes planning for the installation of gas
processing facilities and other surface infrastructure.
Aggregate average daily production (calculated on the days when the fields
were actually in production) during the first half of 2025 was 1,865 boepd,
which is lower than the aggregate daily production rate of 2,077 boepd
achieved on the days of actual production during the corresponding period in
2024 primarily due to the various suspensions of operations at the MEX-GOL, SV
and VAS fields, as well as the disruption caused by the war and natural field
decline. The aggregate production volumes for the period were 48,962 boe,
which is lower than the aggregate production volumes of 377,968 boe for the
corresponding period in 2024 for the same reasons.
The suspension of the MEX-GOL, SV and VAS fields meant that production volumes
were significantly lower during the period, with the result that revenues were
much lower at $3.4 million (1H 2024: $23.7 million). The Group made a net loss
of $1.4 million (1H 2024: $12.6 million profit), and operating profit was also
much lower at $1.0 million (1H 2024: $16.9 million). Despite this, the Group
still generated a net cash inflow from operating activities of $1.2 million
(1H 2024: $21.8 million) enabled by the $4.5 million interest received.
Development activity was significantly impacted by the high level of risk
faced by the Group in Ukraine.
There is significant disruption to the fiscal and economic environment in
Ukraine due to the ongoing war. Whilst during the first half of 2025, the
Ukrainian economy grew, it is likely that fiscal and economic uncertainties
will continue until hostilities cease.
In recent years, the Ukrainian Government implemented a number of reforms in
the oil and gas sector, which include the deregulation of the gas supply
market and simplification of the regulatory procedures applicable to oil and
gas exploration and production activities in Ukraine. The deregulation of the
gas supply market, supported by electronic gas trading platforms, has improved
pricing transparency in Ukraine.
During 2025 to date, Ukrainian gas prices strengthened as the Ukrainian gas
market adapted to the prevailing demand and supply conditions. However,
condensate prices were lower by comparison to the corresponding period in
2024, and there was no LPG production due to a delay in the issue of an LPG
production licence.
Restructuring of Smart Holding Group
In January 2023, the Company was notified that there had been a restructuring
of the ownership of the PJSC Smart-Holding Group, a member of which held a
major shareholding in the Company, and which was ultimately controlled by Mr
Vadym Novynskyi ("Mr Novynskyi"). Under this restructuring, which occurred
with effect from 1 December 2022, Mr Novynskyi disposed of his major indirect
shareholding interest in the Company to two trusts registered in Cyprus named
the SMART Trust and the STEP Trust (the "Trusts"). Further information is
contained in the Company's announcement dated 17 January 2023, and the TR-1
Forms published on 26 January 2023, 31 July 2023 and 20 March 2024.
Regulatory Actions by Ukrainian Authorities and Suspensions of Licences
In early December 2022, the Ukrainian Government imposed sanctions on Mr
Novynskyi, as set out in the Company's announcement dated 9 December 2022.
As announced on 4 January 2023, new legislation, Law No. 2805-IX, relating to
the natural resources sector was enacted in Ukraine, which came into force on
28 March 2023. This legislation was a substantial package of new procedures
and reforms designed to improve the regulatory process relating to the
exploration and development of natural resources in Ukraine. However, the
legislation includes provisions that if the ultimate beneficial owner of a
mineral or hydrocarbon licence becomes the subject of sanctions in Ukraine,
then the State Geologic and Subsoil Survey of Ukraine (the "SGSS") may suspend
or revoke that licence.
Following Law No. 2805-IX coming into force on 28 March 2023, the Ukrainian
authorities have taken a number of regulatory actions against a number of the
Group's subsidiary companies in Ukraine.
As announced on 12 April 2023, such regulatory actions included conducting a
search at the Group's Yakhnyky office, from where the MEX-GOL and SV fields
are operated, and placing certain physical assets of the Ukrainian branch
(representative) office of Regal Petroleum Corporation Limited ("RPC") and LLC
Arkona Gas-Energy ("Arkona") (which respectively hold the MEX-GOL and SV
fields and the SC exploration licence) under seizure, thereby restricting any
actions that would change registration of the property rights relating to such
assets, although the use of such assets was not restricted and therefore the
Company was able to continue to operate the fields. In addition, the Ministry
of Justice of Ukraine (the "MoJ") made an order cancelling the registration
entry made on behalf of a subsidiary of the Company named LLC Regal Petroleum
Corporation (Ukraine) Limited in the Unified State Register of Legal Entities,
Individuals-entrepreneurs and Civil Institutions of Ukraine (the "State
Register") relating to the ultimate beneficial owners of such company, which
were stated as being the trustees (the "Trustees") of the Trusts as previously
notified to the Company, thereby restoring the previous entry in the State
Register, Mr Novynskyi.
On 2 May 2023, the MoJ made further orders cancelling the registration entry
made on behalf of three further Ukrainian subsidiaries of the Company named
LLC Prom-Enerho Produkt ("PEP"), Arkona and LLC Well Investum ("Well
Investum") respectively in the State Register relating to the ultimate
beneficial owners of such companies, which again were stated as being the
Trustees of the Trusts, thereby restoring the previous entry, Mr Novynskyi.
PEP holds the VAS production licence, Arkona holds the SC exploration licence
and Well Investum is a dormant company.
Following the issuance of the abovementioned orders by the MoJ, Mr Novynskyi
was registered in the State Register as the ultimate beneficial owner of each
of PEP and Arkona, and was consequently recognised by the SGSS as the ultimate
beneficial owner of each of the VAS production licence and SC exploration
licence. As a result, on 4 May 2023, the SGSS issued orders suspending the VAS
production licence and SC exploration licence for a period of five years
effective from that date.
However, on 26 June 2024, the SGSS issued orders to renew the validity of each
of the VAS production licence and SC exploration licence, thereby cancelling
the suspensions of those licences, and enabling the resumption of operational
activities at those licences. Further information is contained in the
Company's announcement dated 27 June 2024.
In September 2024, new legislation came into force which requires that
branches (or representative offices) of foreign companies operating in Ukraine
register their ultimate beneficial owners in the State Register. RPC, which
holds the MEX-GOL and SV licences, operates such a branch and therefore
registered the Trustees of the Trusts as its ultimate beneficial owners in the
State Register, based on the notifications made by the Trustees to the Company
and published to the market on 26 January 2023, 31 July 2023 and 20 March
2024.
On 8 October 2024, the Ukrainian Government imposed sanctions on the Trustees,
as set out in the Company's announcement dated 11 October 2024.
On 15 November 2024, the SGSS issued orders to suspend the MEX-GOL, SV and VAS
production licences for a period of ten years effective from 8 October 2024
pursuant to Law No. 2805-IX, based on the sanctions imposed on the Trustees of
the Trusts. Further information is contained in the Company's announcement
dated 18 November 2024.
Following receipt of the suspension orders, the Company issued legal
proceedings in the Poltava District Administrative Court in Ukraine to
challenge such orders, and within such proceedings, the Company obtained
interim rulings (the "Interim Rulings") to lift the suspensions of the
MEX-GOL, SV and VAS production licences pending determination of the
substantive issues in the legal proceedings, as set out in the Company's
announcement dated 26 November 2024.
The SGSS appealed against the Interim Rulings in the Second Appeal
Administrative Court in Ukraine. By a decision dated 22 January 2025, the
appeal against the Interim Ruling relating to the MEX-GOL and SV licences was
allowed, and by a decision dated 27 February 2025, the appeal against the
Interim Ruling relating to the VAS licence was also allowed. As a result, the
respective suspension orders in respect of the MEX-GOL, SV and VAS licences
were reinstated, and the Company ceased all field operations on those licences
immediately following the respective appeal decisions.
The Group is continuing its legal proceedings in Ukraine to challenge the
suspension orders, including investigating the possibility of pursuing further
interim measures to allow restoration of its operations, and continuing to
consult with its external legal and other advisers to seek to mitigate the
risks associated with the regulatory actions of the Ukrainian authorities.
In addition, as announced on 27 August 2025, the Group has commenced
arbitration proceedings against Ukraine under the Treaty between the United
Kingdom and Ukraine. The arbitration proceedings have been commenced in
accordance with the Convention on Settlement of Investment Disputes between
States and Nationals of Other States (the "ICSID Convention"), and the
arbitration has been registered by the International Centre for Settlement of
Investment Disputes ( "ICSID"). Within the arbitration proceedings, the
Company is claiming monetary damages for the loss and damage it has suffered
as a result of Ukraine's actions, as well as the reinstatement of the MEX-GOL,
SV and VAS production licences for the remainder of their respective
durations, and its costs.
Board Change
In January 2025, Igor Basai stepped down as a Non-Executive Director and
Oleksandr Blyzniuk was appointed as a Non-Executive Director.
Outlook
The ongoing war in Ukraine creates a devastating humanitarian situation in
Ukraine, as well as extreme challenges to the social, fiscal, economic and
business environment. This has been exacerbated in respect of the Group by the
regulatory actions of the Ukrainian authorities, culminating in the suspension
of the MEX-GOL, SV and VAS production licences.
Under these circumstances, it is extremely difficult to plan future investment
and operational activities at the Group's fields. However, subject to
resolution of the current regulatory issues with the Ukrainian authorities,
and it being safe to do so, the Group is planning to undertake further limited
development activities during the remainder of 2025 and beyond in order to
continue the development of its fields. In doing so, the Group is taking and
will take all measures available to protect and safeguard its personnel and
business, with the safety and wellbeing of its personnel and contractors being
paramount. The Group retains a significant proportion of its cash reserves
outside Ukraine, and this provides a material buffer to any further
disruptions to the Group's operations. This has enabled the Board to reach the
opinion that the Group has sufficient resources to navigate the current risk
environment for the foreseeable future.
In conclusion, on behalf of the Board, I would like to thank all of our staff
for their continued dedication and efforts during 2025 to date, especially
their remarkable courage and fortitude during the ongoing war in Ukraine.
Chuck Valceschini
Chairman
Chief Executive's Statement
Introduction
The war in Ukraine, as well as adverse regulatory actions by the Ukrainian
authorities, have materially disrupted the Group's development activity at its
Ukrainian fields during the first half of 2025. During the period, such
regulatory actions resulted in the continued suspensions of the MEX-GOL, SV
and VAS licences, and currently there are no production operations at these
fields.
At the SC exploration licence, development activities continued and this
included planning for the installation of new gas processing facilities and
other surface infrastructure as well as assessing the feasibility of an
alternative option to connect to existing gas processing facilities.
Overall production in the first half of 2025 was lower than in the
corresponding period in 2024 due to the disruption to production operations
caused by the war in Ukraine, natural field decline and the suspensions of the
MEX-GOL, SV and VAS production licences.
Production
The average daily production of gas, condensate, oil and LPG for the 23 days
that the MEX-GOL and SV fields were producing (182 days in 1H 2024) and the 58
days that the VAS field was producing (nil days in 1H 2024), during the six
month period ended 30 June 2025, is shown below.
Field Gas Condensate* LPG** Aggregate
(MMscf/d) (bbl/d) (boe/d) boepd
1H 2025 1H 2024 1H 2025 1H 2024 1H 2025 1H 2024 1H 2025 1H 2024
7.1 8.6 449 323 - 325 1,692 2,077
MEX-GOL & SV
0.9 - 6 - - - 173 -
VAS
8.0 8.6 455 323 - 325 1,865 2,077
Total
* Condensate includes light oil from well MEX-102 which commenced production
in late October 2024
** There was no LPG production in 1H 2025 due to a delay in renewal of the
LPG production licence
As a result of the continued operational disruptions caused by the war,
regulatory actions and deferment of development work, the Group's average
daily production rate for the first half of 2025 declined. During the period,
regulatory actions taken by the Ukrainian authorities resulted in the
suspensions of the MEX-GOL and SV licences from 22 January 2025 and the VAS
licence from 27 February 2025, with, in each case, such suspensions currently
continuing. Accordingly, there is currently no production from these fields.
Aggregate production volumes for 1H 2025 were 48,962 boe, which is lower than
the aggregate production volumes of 377,968 boe in the corresponding period in
2024 for the reasons set out above.
Operations
The war in Ukraine has significantly affected fiscal and economic stability in
the country, and the oil and gas sector in Ukraine has been particularly
affected by interruptions to power supplies, the unavailability of oil field
equipment and services and disruptions to the markets, including weaker
demand, for the sale of gas, condensate, oil and LPG. These disruptions
impacted the Group's realised hydrocarbon prices in Ukraine, in turn impacting
the Group's revenues and profitability during the period.
During the first half of 2025, the Group continued to refine its geological
subsurface models of the MEX-GOL, SV and VAS fields, as well as the SC licence
area, in order to enhance its strategy for the further development of such
fields and licence area, including the timing and level of future capital
investment required to exploit the hydrocarbon resources.
At the MEX-GOL and SV fields, limited operational activities were undertaken
in the period up to the reinstatement of the suspensions of these licences on
22 January 2025, after which all operational activities were suspended. At
these fields, until the reinstatement of the suspensions, the Group continued
to operate each of the SV-2 and SV-12 wells under joint venture agreements
with PJSC Ukrnafta, the majority State-owned oil and gas producer. Under the
agreements, the gas and condensate produced from the respective wells is sold
under an equal net profit sharing arrangement between the Group and PJSC
Ukrnafta, with the Group accounting for the hydrocarbons produced and sold
from the wells as revenue, and the net profit share due to PJSC Ukrnafta being
treated as a lease expense in cost of sales. However, following the SV-2 well
experiencing water ingress, a workover of this well was undertaken to replace
the production string and remove obstructions in the well, but this work was
unsuccessful and further remedial work is not being considered at the present
time.
At the VAS field, production operations were undertaken in the period up to
the reinstatement of the suspension of this licence on 27 February 2025, after
which all operational activities were suspended.
At the SC exploration licence area, development work continued, and this
included planning for the installation of new gas processing facilities and
other surface infrastructure as well as assessing the feasibility of an
alternative option to connect to existing gas processing facilities.
Outlook
The ongoing war in Ukraine has caused significant disruption to the country as
a whole and to the Group's business activities, and until there is a
resolution to the war, the disruption and uncertainty are likely to continue.
Subject to resolution of the current regulatory issues with the Ukrainian
authorities and it being safe to do so, during the remainder of 2025 and 2026,
the Group plans to continue the development of its fields to the extent it is
possible to do so.
However, such work at the MEX-GOL, SV and VAS fields, will remain suspended
until there is a resolution of the regulatory issues, including the lifting of
the suspension orders made in respect of those licences.
At the SC licence area, the work on development plans for the licence area
will continue.
Finally, I would like to add my thanks to all of our staff for the continued
hard work and dedication they have shown over the course of 2025 to date, and
to especially recognise their continuing efforts and professionalism in the
face of the extremely challenging current situation in Ukraine.
Oleksiy Zayets
Chief Executive Officer
Finance Review
The periods of suspension of its production licences and the resultant reduced
production and sales volumes for much of the first half of 2025 resulted in
the Group making a net loss for the period of $1.4 million (1H 2024: $12.6
million profit).
Revenue for the period, derived from the sale of the Group's Ukrainian gas,
condensate, oil and LPG production, was down 86% at $3.4 million (1H 2024:
$23.7 million), primarily as a result of the much lower production rates due
to the licence suspensions.
Aggregate daily production for the first half of 2025 was down approximately
10% at 1,865 boepd (1H 2024: 2,077 boepd), in each case calculated on the days
when the Group's fields were actually in production, primarily due to the
suspension of the MEX-GOL, SV and VAS production licences, as well as the
disruption to operations and ongoing reduced levels of field development as a
result of the war in Ukraine and natural field decline. Aggregate production
volumes for the period were 48,962 boe, which is lower than the aggregate
production volumes of 377,968 boe in the corresponding period in 2024 for the
same reasons.
During the first half of 2025, while there was less volatility in global, and
particularly European, gas prices, the war in Ukraine continued to disrupt the
Ukrainian gas market. Nevertheless, there was an improvement in realised gas
sales prices, resulting in a 23% increase in average gas price realisations in
the period at $377/Mm(3) (UAH15,836/Mm(3)). Average sales prices for
condensate declined by 15% at $63/bbl. Following the successful workover of
the MEX-102 well, oil production commenced during October 2024 with average
realised oil prices of $64/bbl. There were no LPG sales in the period due to a
delay in the renewal of the Group's LPG production licence. Since 1 March
2025, there have been no hydrocarbon sales as a result of the suspension of
the MEX-GOL, SV and VAS production licences.
Gross profit for the period was 91% lower at $1.4 million (1H 2024: $15.5
million) due to the much lower production rates caused by the licence
suspensions. Cash generated from operations was negative at $2.0 million (1H
2024: $21.3 million) for similar reasons.
Cost of sales for the period was also proportionately lower at $2.0 million
(1H 2024: $8.2 million), with the decline in production resulting in a decline
in depreciation as well as reducing the revenue-related costs of taxes and
well rental.
The subsoil tax rates applicable to gas production were stable during the
first six months of 2025 as follows:
(i) when gas prices are up to $150/Mm(3), the rate for wells drilled prior to 1
January 2018 ("old wells") is 14.5% for gas produced from deposits at depths
shallower than 5,000 metres and 7% for gas produced from deposits deeper than
5,000 metres, and for wells drilled after 1 January 2018 ("new wells") is 6%
for gas produced from deposits at depths shallower than 5,000 metres and 3%
for gas produced from deposits deeper than 5,000 metres;
(ii) when gas prices are between $150/Mm(3) and $400/Mm(3), the rate for old wells
is 29% for gas produced from deposits at depths shallower than 5,000 metres
and 14% for gas produced from deposits deeper than 5,000 metres, and for new
wells is 12% for gas produced from deposits at depths shallower than 5,000
metres and 6% for gas produced from deposits deeper than 5,000 metres;
(iii) when gas prices are more than $400/Mm(3), for the first $400/Mm(3), the rate
for old wells is 29% for gas produced from deposits at depths shallower than
5,000 metres and 14% for gas produced from deposits deeper than 5,000 metres,
and for new wells is 12% for gas produced from deposits at depths shallower
than 5,000 metres and 6% for gas produced from deposits deeper than 5,000
metres, and for the difference between $400/Mm(3) and the actual price, the
rate for old wells is 65% for gas produced from deposits at depths shallower
than 5,000 metres and 31% for gas produced from deposits deeper than 5,000
metres, and for new wells is 36% for gas produced from deposits at depths
shallower than 5,000 metres and 18% for gas produced from deposits deeper than
5,000 metres
The subsoil tax rates applicable to condensate and oil production were 31% for
condensate and oil produced from deposits shallower than 5,000 metres and 16%
for condensate and oil produced from deposits deeper than 5,000 metres, for
both old and new wells.
As a direct result of the war in Ukraine, including the significant decline in
domestic consumption disrupting the previous supply, demand and pricing
dynamics, there has been a divergence between domestic and European gas
pricing, and accordingly, the methodology (linked to European prices) used to
determine the reference gas price for the subsoil tax rates has had a
significantly detrimental effect for domestic gas producers. In order to
address this issue, legislation was implemented in August 2022 which modified
such methodology to ensure that it operates as originally intended (with such
reference price being aligned with domestic prices).
Administrative expenses for the period were higher at $2.9 million (1H 2024:
$2.4 million) as a result of higher staff and consultancy costs.
The tax charge for the six months ended 30 June 2025 was lower at $2.0 million
(1H 2024: $4.2 million), and comprised a current tax charge of $0.4 million
(1H 2024: $3.1 million) and a deferred tax charge of $1.6 million (1H 2024:
$1.1 million).
A deferred tax asset relating to the Group's provision for decommissioning as
at 30 June 2025 of $0.7 million (31 December 2024: $0.6 million) was
recognised on the tax effect of the temporary differences of the Group's
provision for decommissioning at the MEX-GOL and SV fields, and its tax base.
A deferred tax liability relating to the Group's development and production
assets at the MEX-GOL and SV fields as at 30 June 2025 of $8.1 million (31
December 2024: $6.4 million) was recognised on the tax effect of the temporary
differences between the carrying value of the Group's development and
production asset at the MEX-GOL and SV fields, and its tax base.
A deferred tax asset relating to the Group's provision for decommissioning as
at 30 June 2025 of $0.4 million (31 December 2024: $0.4 million) was
recognised on the tax effect of the temporary differences on the Group's
provision on decommissioning at the VAS field, and its tax base. A deferred
tax asset relating to the Group's development and production assets at the VAS
field as at 30 June 2025 of $0.1 million (31 December 2024: $0.1 million)
was recognised on the tax effect of the temporary differences between the
carrying value of the Group's development and production asset at the VAS
field, and its tax base.
Capital investment of $0.2 million reflects the greatly reduced investment in
the Group's oil and gas development and production assets during the period
(1H 2024: $0.5 million). The low level of capital investment in the period is
a function of the deferral of certain aspects of the Group's development plans
necessitated by the ongoing war in Ukraine and the suspension of the Group's
MEX-GOL, SV and VAS licences since November 2024.
A review of any indicators of impairment of the carrying value of the Group's
assets was undertaken at the period end and this review concluded that the
suspension of the MEX-GOL, SV and VAS production licence had resulted in such
an indicator. Impairment reviews were therefore conducted on the carrying
value of the Group's assets but did not result in the recognition of any
further impairment loss (1H 2024: $nil).
Cash and cash equivalents held as at 30 June 2025 were higher at $100.7
million (1H 2024: $93.7 million). The Group's cash and cash equivalents
balance as at 22 September 2025 was $100.2 million, held as to $84.2 million
equivalent in Ukrainian Hryvnia and the balance of $16.0 million equivalent
predominantly in US Dollars, Euros and Pounds Sterling.
During the first six months of 2025, the Ukrainian Hryvnia was stable against
the US Dollar, at UAH42.0/$1.00 on 31 December 2024 and UAH41.6/$1.00 on 30
June 2025. The impact of this was $1.6 million of foreign exchange gain (1H
2024: $8.9 million of foreign exchange loss). Increases and decreases in the
value of the Ukrainian Hryvnia against the US Dollar affect the carrying value
of the Group's assets. The official exchange rate of the Ukrainian Hryvnia to
the US Dollar on 22 September 2025 was UAH41.25/$1.00.
Cash from operating activities has funded capital investment during the first
six months of 2025, and along with the Group's current cash position, are the
sources from which the Group plans to fund the limited development programmes
for its assets over the remainder of 2025 and beyond. This is coupled with the
fact that the Group has no debt covenants that may otherwise impede its
ability to implement contingency plans if domestic and/or global circumstances
dictate. This flexibility and ability to monitor and manage development plans
and liquidity is a cornerstone of our planning, and underpins our assessments
of the future. The annual Group running costs of less than $8 million are
currently covered by interest income from the Group's monetary resources at
the end of the period of $100.7 million, meaning that the Group remains in a
very strong position, notwithstanding the impact of the current regulatory
actions of the Ukrainian authorities and the war in Ukraine, as well as any
local or global shocks that may occur to the industry and/or the Group.
Bruce Burrows
Finance Director
Principal Risks and How We Manage Them
The Group has a risk evaluation methodology in place to assist in the review
of the risks across all material aspects of its business. This methodology
highlights external, operational and technical, financial and corporate risks
and assesses the level of risk and potential consequences. It is periodically
presented to the Audit Committee and the Board for review, to bring to their
attention potential risks and, where possible, propose mitigating actions. Key
risks recognised and mitigation factors are detailed below:-
Risk Mitigation
External risks
War in Ukraine
On 24 February 2022, Russia invaded Ukraine and there is currently a serious The Group has assets in the areas of conflict in the east of Ukraine, and the
and ongoing war within Ukraine. This war is having a huge impact on Ukraine war has disrupted its operations in those areas. The Group had been
and its population, with significant destruction of infrastructure and undertaking only limited field and production operations at the MEX-GOL, SV
buildings in the areas of conflict, as well as damage in other areas of and VAS fields, as well as the SC licence area, until the suspension of the
Ukraine. The war is resulting in significant casualties and has caused a huge MEX-GOL, SV and VAS licences in November 2024. During production operations at
humanitarian catastrophe and refugee influx into neighbouring countries. The the fields, inventories of hydrocarbons are being maintained at minimum
war is also impacting the fiscal and economic environment in Ukraine, as well levels. At the sites where operations are suspended, there are no staff
as the financial stability and banking system in Ukraine, including permanently on site, except for necessary security staff. Where possible, all
restrictions on the transfer of funds outside Ukraine. The war is an other staff work remotely and have been supplied with all necessary devices
escalation of the previous regional conflict risk faced by the business, a and software to facilitate remote working. Additionally, the Group aims to
dispute that has been going on since 2014 in parts of eastern Ukraine, and maintain a significant proportion of its cash resources outside Ukraine. The
since that time Russia has continued to occupy Crimea. The current war is also Group continues to monitor the situation and endeavours to protect its assets
having a significant adverse effect on the Ukrainian financial markets, and safeguard its staff and contractors.
hampering the ability of Ukrainian companies and banks to obtain funding from
the international capital and debt markets. The war has disrupted the Group's
business and operations, causing periods of suspension of field operations,
and has also impacted the supply of materials and equipment and the
availability of contractors to undertake field operations. At present, the war
is ongoing and the scope and duration of the war is uncertain.
Risk relating to Ukraine
Ukraine is an emerging market and as such the Group is exposed to greater The Group minimises this risk by continuously monitoring the market in Ukraine
regulatory, economic and political risks than it would be in other and by maintaining as strong a working relationship as possible with the
jurisdictions. Emerging economies are generally subject to a volatile Ukrainian regulatory authorities. The Group also maintains a significant
political and economic environment, which makes them vulnerable to market proportion of its cash holdings in international banks outside Ukraine.
downturns elsewhere in the world and could adversely impact the Group's
ability to operate in the market. Furthermore, the war in Ukraine is impacting
the social, fiscal and economic environment, the financial and banking system,
and the economic stability of Ukraine. As a result, Ukraine will require
financial assistance and/or aid from international financial agencies to
provide economic support and assist with the reconstruction of infrastructure
and buildings damaged in the war.
Banking system in Ukraine
The banking system in Ukraine has been under great strain in recent years due The creditworthiness and potential risks relating to the banks in Ukraine are
to the weak level of capital, low asset quality caused by the economic regularly reviewed by the Group, but the geopolitical and economic events in
situation, currency depreciation, changing regulations and other economic Ukraine over recent years have significantly weakened the Ukrainian banking
pressures generally, and so the risks associated with the banks in Ukraine sector. This has been exacerbated by the current war in Ukraine. In light of
have been significant, including in relation to the banks with which the Group this, the Group has taken and continues to take steps to diversify its banking
has operated bank accounts. This situation was improving moderately following arrangements between a number of banks in Ukraine. These measures are designed
remedial action by the National Bank of Ukraine, but the current war has to spread the risks associated with each bank's creditworthiness, and the
significantly affected such improvements, and the National Bank of Ukraine has Group endeavours to use banks that have the best available creditworthiness.
imposed a number of restrictive measures designed to protect the banking Nevertheless, and despite the recent improvements, the Ukrainian banking
system, including restrictions on the transfer of funds outside Ukraine sector remains weakly capitalised and so the risks associated with the banks
(albeit that the Group aims to maintain a significant proportion of its cash in Ukraine remain significant, including in relation to the banks with which
resources outside Ukraine). In addition, Ukraine continues to be supported by the Group operates bank accounts. As a consequence, the Group also maintains a
funding from the International Monetary Fund. significant proportion of its cash holdings in international banks outside
Ukraine.
Geopolitical environment in Ukraine
Although there were some improvements in recent years, there has not been a The Group continually monitors the market and business environment in Ukraine
final resolution of the political, fiscal and economic situation in Ukraine, and endeavours to recognise approaching risks and factors that may affect its
and the current war has had a severe detrimental effect on the economic business. However, the war in Ukraine creates material challenges in planning
situation in Ukraine. The ongoing effects of this are difficult to predict and future investment and operations. The Group is limiting its operational
likely to continue to affect the Ukrainian economy and potentially the Group's activities to minimise risk to its staff and contractors, and to limit its
business. This situation is currently affecting the Group's production and financial exposure.
field operations, and the ongoing instability is disrupting the Group's
development and operational planning for its assets.
Climate change
Any near and medium-term continued warming of the planet can have potentially The Group's plans include: assessing, reducing and/or mitigating its emissions
increasing negative social, economic and environmental consequences, in its operations; and identifying climate change-related risks and assessing
generally, globally and regionally, and specifically in relation to the Group. the degree to which they can affect its business, including financial
The potential impacts include: loss of market; and increased costs of implications. The HSE Committee is specifically tasked with overseeing,
operations through increasing regulatory oversight and controls, including measuring, benchmarking and mitigating the Group's environmental and climate
potential effective or actual loss of licences to operate. As a diligent impact, which will be reported on in future periods. At this stage, the Group
operator aware of and responsive to its good stewardship responsibilities, the does not consider climate change to have any material implications for the
Group not only needs to monitor and modify its business plans and operations Group's financial statements, including accounting estimates.
to react to changes, but also to ensure its environmental footprint is as
minimal as it can practicably be in managing the hydrocarbon resources the
Group produces.
Operational and technical risks
Quality, Health, Safety and Environment ("QHSE")
The oil and gas industry, by its nature, conducts activities which can cause The Group maintains QHSE policies and requires that management, staff and
health, safety, environmental and security incidents. Serious incidents can contractors adhere to these policies. The policies ensure that the Group meets
not only have a financial impact but can also damage the Group's reputation Ukrainian legislative standards in full and achieves international standards
and the opportunity to undertake further projects. The war in Ukraine poses to the maximum extent possible. As a consequence of the current war in Ukraine
significant risks to field operations, by way of potential threat to the lives and the periods of suspension of the Group's production licences, only limited
of employees and contractors, and damage to equipment and infrastructure. field operations have been undertaken at the Group's fields. Only essential
staff are located at site, and all other staff are working remotely, either
from areas away from the conflict areas or outside Ukraine. The Group has
invested in technology that allows many staff to work just as effectively from
remote locations.
Industry risks
The Group is exposed to risks which are generally associated with the oil and The Group has well qualified and experienced technical management staff to
gas industry. For example, the Group's ability to pursue and develop its plan and supervise operational activities. In addition, the Group engages with
projects and undertake development programmes depends on a number of suitably qualified local and international geological, geophysical and
uncertainties, including the availability of capital, seasonal conditions, engineering experts and contractors to supplement and broaden the pool of
regulatory approvals, gas, condensate, oil and LPG prices, development costs expertise available to the Group. Detailed planning of development activities
and drilling success. As a result of these uncertainties, it is unknown is undertaken with the aim of managing the inherent risks associated with oil
whether potential drilling locations identified on proposed projects will ever and gas exploration and production, as well as ensuring that appropriate
be drilled or whether these or any other potential drilling locations will be equipment and personnel are available for the operations, and that local
able to produce gas, condensate or oil. In addition, drilling activities are contractors are appropriately supervised.
subject to many risks, including the risk that commercially productive
reservoirs will not be discovered. Drilling for hydrocarbons can be
unprofitable, not only due to dry holes, but also as a result of productive
wells that do not produce sufficiently to be economic. In addition, drilling
and production operations are highly technical and complex activities and may
be curtailed, delayed or cancelled as a result of a variety of factors.
Production of hydrocarbons
Producing gas and condensate reservoirs are generally characterised by In recent years, the Group has engaged external technical consultants to
declining production rates which vary depending upon reservoir characteristics undertake a comprehensive review and re-evaluation study of the MEX-GOL and SV
and other factors. Future production of the Group's gas and condensate fields in order to gain an improved understanding of the geological aspects of
reserves, and therefore the Group's cash flow and income, are highly dependent the fields and reservoir engineering, drilling and completion techniques, and
on the Group's success in operating existing producing wells, drilling new the results of this study and further planned technical work are being used by
production wells and efficiently developing and exploiting any reserves, and the Group in the future development of these fields. The Group has established
finding or acquiring additional reserves. The Group may not be able to an ongoing relationship with such external technical consultants to ensure
develop, find or acquire reserves at acceptable costs. The experience gained that technical management and planning is of a high quality in respect of all
from drilling undertaken to date highlights such risks as the Group targets development activities on the Group's fields.
the appraisal and production of these hydrocarbons.
Risks relating to the further development and operation of the Group's gas and
condensate fields in Ukraine
The planned development and operation of the Group's gas and condensate fields The Group's technical management staff, in consultation with its external
in Ukraine is susceptible to appraisal, development and operational risk. This technical consultants, carefully plan and supervise development and
could include, but is not restricted to, delays in the delivery of equipment operational activities with the aim of managing the risks associated with the
in Ukraine, failure of key equipment, lower than expected production from further development of the Group's fields in Ukraine. This includes detailed
wells that are currently producing, or new wells that are brought on-stream, review and consideration of available subsurface data, utilisation of modern
problematic wells and complex geology which is difficult to drill or geological software, and utilisation of engineering and completion techniques
interpret. The generation of significant operational cash is dependent on the developed for the fields. With regards to operational activities, the Group
successful delivery and completion of the development and operation of the ensures that appropriate equipment and personnel are available for the
fields. The war in Ukraine is impacting planning and implementation of operations, and that operational contractors are appropriately supervised. In
development and operations at the Group's fields. addition, the Group performs a review of indicators of impairment of its oil
and gas assets on an annual basis, and considers whether an assessment of its
oil and gas assets by a suitably qualified independent assessor is appropriate
or required.
Drilling and workover operations
Due to the depth and nature of the reservoirs in the Group's fields, the The utilisation of detailed sub-surface analysis, careful well planning and
technical difficulty of drilling or re-entering wells in the Group's fields is engineering in designing work programmes, along with appropriate procurement
high, and this and the equipment limitations within Ukraine, can result in procedures and competent on-site management, aims to minimise these risks.
unsuccessful or lower than expected outcomes for wells.
Maintenance of facilities
There is a risk that production or transportation facilities can fail due to The Group's facilities are operated and maintained at standards above the
non-adequate maintenance, control or poor performance of the Group's Ukrainian minimum legal requirements. Operations staff are experienced and
suppliers. receive supplemental training to ensure that facilities are properly operated
and maintained. Service providers are rigorously reviewed at the tender stage
and are monitored during the contract period.
Financial risks
Exposure to cash flow and liquidity risk
There is a risk that insufficient funds are available to meet the Group's The Group maintains adequate cash reserves and closely monitors forecasted and
development obligations to commercialise the Group's oil and gas assets. Since actual cash flow, as well as short and longer-term funding requirements. The
a significant proportion of the future capital requirements of the Group is Group aims to maintain a significant proportion of its cash resources outside
expected to be derived from operational cash generated from production, Ukraine. The Group does not currently have any loans outstanding, internal
including from wells yet to be drilled, there is a risk that in the longer financial projections are regularly made based on the latest estimates
term insufficient operational cash is generated, or that additional funding, available, and various scenarios are run to assess the robustness of the
should the need arise, cannot be secured. The war in Ukraine has disrupted Group's liquidity. However, as the risk to future capital funding is inherent
production operations at the Group's fields, and consequently reduced in the oil and gas exploration and development industry and reliant in part on
anticipated cash flows from those fields, and this has increased the risk future development success, it is difficult for the Group to take any other
regarding sufficiency of capital for development. In addition, the conflict measures to further mitigate this risk, other than tailoring its development
may disrupt the sales market for hydrocarbons that are produced. Currently, activities to its available capital funding from time to time. The Group aims
however, hydrocarbon prices are reasonably strong, which is ameliorating the to maintain as diverse a range of banking relationships as possible to reduce
potential reduction in cash flows, and the Group's sales counterparties are the risks associated with limited accessibility to banking services which may
meeting their financial obligations. In addition to the risk of operational exist from time to time.
cash shortfalls, there is a risk that even with strong cash flows and cash
balances, the Group, from time to time, can suffer from non-Ukrainian
operational banking appetite for businesses such as the Group's business,
which can ultimately manifest itself in having restricted access to banking
services.
Ensuring appropriate business practices
The Group operates in Ukraine, an emerging market, where certain inappropriate The Group maintains anti-bribery and corruption policies in relation to all
business practices may, from time to time occur, such as corrupt business aspects of its business, and ensures that clear authority levels and robust
practices, bribery, appropriation of property and fraud, all of which can lead approval processes are in place, with stringent controls over cash management
to financial loss. and the tendering and procurement processes. In addition, office and site
protection is maintained to protect the Group's assets.
Hydrocarbon price risk
The Group derives its revenue principally from the sale of its Ukrainian The Group sells a proportion of Its hydrocarbon production through offtake
hydrocarbon production. These revenues are subject to commodity price arrangements, which include pricing formulae so as to ensure that it achieves
volatility and political influence. A prolonged period of low hydrocarbon market prices for its products, as well as utilising the electronic market
prices may impact the Group's ability to maintain its long-term investment platforms in Ukraine to achieve market prices for its remaining products.
programme with a consequent effect on its growth rate, which in turn may However, hydrocarbon prices in Ukraine are, in the longer-term, linked to
impact the Company's share price or any shareholder returns. Lower hydrocarbon world hydrocarbon prices and so the Group is subject to external price trends,
prices may not only decrease the Group's revenues per unit, but may also as well as shorter-term volatility in the Ukrainian hydrocarbon market.
reduce the amount of hydrocarbons which the Group can produce economically, as
would increases in costs associated with hydrocarbon production, such as
subsoil taxes and royalties. The overall economics of the Group's key assets
(being the net present value of the future cash flows from its Ukrainian
projects) are far more sensitive to long-term hydrocarbon prices than
short-term price volatility. However, short-term volatility does affect
liquidity risk, as, in the early stage of the projects, income from production
revenues is offset by capital investment. In addition, the war in Ukraine has
disrupted the sales market for hydrocarbons.
Currency risk
Since the beginning of 2014, the Ukrainian Hryvnia significantly devalued The Group's sales proceeds are received in Ukrainian Hryvnia, and the majority
against major world currencies, including the US Dollar, where it has fallen of the capital expenditure costs for the current investment programme will be
from UAH8.3/$1.00 on 1 January 2014 to UAH42.0/$1.00 on 31 December 2024, and incurred in Ukrainian Hryvnia, thus the currency of revenue and costs are
UAH41.25/$1.00 on 22 September 2025. This devaluation has been a significant largely matched. In light of the previous devaluation and volatility of the
contributor to the imposition of banking restrictions by the National Bank of Ukrainian Hryvnia against major world currencies, and since the Ukrainian
Ukraine over recent years. In addition, the geopolitical events in Ukraine Hryvnia does not benefit from the range of currency hedging instruments which
over recent years and the current war in Ukraine are likely to continue to are available in more developed economies, the Group has adopted a policy
impact the valuation of the Ukrainian Hryvnia against major world currencies. that, where possible, funds not required for use in Ukraine be retained on
Further devaluation of the Ukrainian Hryvnia against the US Dollar will affect deposit in the United Kingdom and Europe, principally in US Dollars.
the carrying value of the Group's assets.
Counterparty and credit risk
The challenging political and economic environment in Ukraine and current war The Group monitors the financial position and credit quality of its
means that businesses can be subject to significant financial strain, which contractual counterparties and seeks to manage the risk associated with
can mean that the Group is exposed to increased counterparty risk if counterparties by contracting with creditworthy contractors and customers.
counterparties fail or default in their contractual obligations to the Group, Hydrocarbon production is sold on terms that limit supply credit and/or title
including in relation to the sale of its hydrocarbon production, resulting in transfer until payment is received.
financial loss to the Group.
Financial markets and economic outlook
The performance of the Group is influenced by global economic conditions and, The Group's sales proceeds are received in Ukrainian Hryvnia and a significant
in particular, the conditions prevailing in the United Kingdom and Ukraine. proportion of investment expenditure is made in Ukrainian Hryvnia, which
The economies in these regions have been subject to volatile pressures in minimises risks related to foreign exchange volatility. However, hydrocarbon
recent periods, with the global economy having experienced a long period of prices in Ukraine are implicitly linked to world hydrocarbon prices and so the
difficulty, the COVID pandemic, and more particularly the current war in Group is subject to external price movements. The Group holds a material
Ukraine. This has led to extreme foreign exchange movements in the Ukrainian proportion of its cash reserves in the United Kingdom and Europe, mostly in US
Hryvnia, high inflation and interest rates, and increased credit risk relating Dollars, with reputable financial institutions. The financial status of
to the Group's key counterparties. counterparties is carefully monitored to manage counterparty risks.
Nevertheless, the overall exposure that the Group faces as a result of these
risks cannot be predicted and many of these are outside of the Group's
control.
Corporate risks
Ukrainian production licences
The Group operates in a region where the right to production can be challenged The Group ensures compliance with commitments and regulations relating to its
by State and non-State parties. During 2010, this manifested itself in the production and exploration licences through Group procedures and controls or,
form of a Ministry Order instructing the Group to suspend all operations and where this is not immediately feasible for practical or logistical
production from its MEX-GOL and SV production licences, which was not resolved considerations, seeks to enter into dialogue with the relevant Government
until mid-2011. In 2013, new rules relating to the updating of production bodies with a view to agreeing a reasonable time frame for achieving
licences led to further challenges being raised by the Ukrainian authorities compliance or an alternative, mutually agreeable course of action. Work
to the production licences held by independent oil and gas producers in programmes are designed to ensure that all licence obligations are met and
Ukraine, including the Group. In March 2019, a Ministry Order was issued continual interaction with Government bodies is maintained in relation to
instructing the Group to suspend all operations and production from its VAS licence obligations and commitments.
production licence, which was not resolved until March 2023. In 2020, LLC
Arkona Gas-Energy ("Arkona") faced a challenge from PJSC Ukrnafta concerning
the validity of its SC exploration licence, which was not ultimately resolved
in Arkona's favour until February 2021. During 2023, the Ukrainian authorities
took a number of regulatory actions against the Group, which culminated in
Ministry Orders being made in May 2023 to suspend all operations and
production on the VAS production licence and SC exploration licence area,
which suspensions were not lifted until June 2024. In November 2024, a
Ministry Order was issued to suspend all operations and production at the
MEX-GOL, SV and VAS production licences, which suspensions, although
temporarily lifted, currently remain in force. Excepting the current
suspension orders made in respect of the MEX-GOL, SV and VAS production
licences, all such challenges affecting the Group have been successfully
defended through the Ukrainian legal system. The business environment is such
that these types of challenges may arise at any time in relation to the
Group's operations, licence history, compliance with licence commitments
and/or local regulations. In addition, production licences in Ukraine are
issued with and/or carry ongoing compliance obligations, which if not met, may
lead to the loss of a licence.
Risks relating to key personnel
The Group's success depends upon skilled management as well as technical The Group periodically reviews the compensation and contractual terms of its
expertise and administrative staff. The loss of service of critical members staff. In addition, the Group has developed relationships with a number of
from the Group's team could have an adverse effect on the business. The technical and other professional experts and advisers, who are used to provide
current war in Ukraine has meant that, as far as possible, the Group's staff specialist services as required. As a result of the war, only essential staff
have needed to move away from areas of conflict and work remotely. are located at site, and all other staff are working remotely, either from
areas away from the conflict areas or outside Ukraine. The Group has invested
in technology that allows many staff to work just as effectively from remote
locations.
Directors' Responsibility Statement
The Directors confirm that, to the best of their knowledge:
a) the unaudited condensed interim consolidated financial
statements have been prepared in accordance with UK-adopted International
Accounting Standard 34, 'Interim Financial Reporting' ("IAS 34") and the AIM
Rules for Companies; and
b) these unaudited interim results include:
(i) a fair review of the information required (i.e. an indication of
important events and their impact and a description of the principal risks and
uncertainties for the remaining six months of the financial year); and
(ii) a fair review of the information required on related party
transactions.
A list of current Directors is maintained on the Group's website,
www.enwell-energy.com.
Condensed Interim Consolidated Income Statement
6 months ended 6 months ended
30 Jun 25 30 Jun 24
(unaudited) (unaudited)
Note $000 $000
Revenue 3 3,395 23,698
Cost of sales 4 (2,031) (8,152)
Gross profit 1,364 15,546
Administrative expenses (2,871) (2,365)
Other operating gains, (net) 5 2,495 3,685
Operating profit 988 16,866
Net income from investments - 446
Net impairment gains/(losses) on financial assets 117 (136)
Other (losses), (net) (57) (63)
Finance costs, (net) (393) (309)
Profit before taxation 655 16,804
Income tax expense 6 (2,030) (4,197)
(Loss)/profit for the period (1,375) 12,607
Earnings per share (cents)
Basic and diluted 7 (0.4)c 3.9c
The Notes set out below are an integral part of these unaudited condensed
interim consolidated financial statements.
Condensed Interim Consolidated Statement of Comprehensive Income
6 months ended 6 months ended
30 Jun 25 30 Jun 24
(unaudited) (unaudited)
$000 $000
(Loss)/profit for the period (1,375) 12,607
Other comprehensive income/(loss):
Items that may be subsequently reclassified to profit or loss:
Equity - foreign currency translation 1,591 (8,901)
Total other comprehensive income/(loss) 1,591 (8,901)
Total comprehensive income/(loss) for the period 216 3,706
The Notes set out below are an integral part of these unaudited condensed
interim consolidated financial statements.
Condensed Interim Consolidated Balance Sheet
30 Jun 25 31 Dec 24
(unaudited) (audited)
Note $000 $000
Assets
Non-current assets
Property, plant and equipment 8 72,802 72,083
Intangible assets 9 7,317 7,317
Right-of-use assets 509 633
Deferred tax asset 6 399 363
Prepayments for fixed assets 48 363
Non-current receivables 52 51
81,127 80,810
Current assets
Inventories 2,989 3,152
Trade and other receivables 10 5,682 7,648
Cash and cash equivalents 12 100,697 99,398
109,368 110,198
Total assets 190,495 191,008
Liabilities
Current liabilities
Trade and other payables (1,406) (3,286)
Lease liabilities (351) (343)
Corporation tax payable (119) (974)
Interest (12) -
(1,888) (4,603)
Net current assets 107,480 105,595
Non-current liabilities
Provision for decommissioning 11 (8,550) (8,276)
Lease liabilities (338) (492)
Defined benefit liability (321) (323)
Deferred tax liability 6 (7,400) (5,796)
Loans (276) -
Other non-current liabilities (66) (78)
(16,951) (14,965)
Total liabilities (18,839) (19,568)
Net assets 171,656 171,440
Equity
Called up share capital 28,115 28,115
Foreign exchange reserve (159,437) (161,028)
Other reserve 4,273 4,273
Retained earnings 298,705 300,080
Total equity 171,656 171,440
The Notes set out below are an integral part of these unaudited condensed
interim consolidated financial statements.
Condensed Interim Consolidated Statement of Changes in Equity
Called up share capital Share premium account Merger Capital contributions reserve Foreign exchange reserve* Retained earnings Total equity
reserve
$000 $000 $000 $000 $000 $000 $000
As at 1 January 2025 (audited) 28,115 - (3,204) 7,477 (161,028) 300,080 171,440
Profit/(loss) for the period - - - - - (1,375) (1,375)
Other comprehensive income/(loss)
- exchange differences - - - - 1,591 - 1,591
Total comprehensive income/(loss) - - - - 1,591 (1,375) 216
As at 30 June 2025 (unaudited) 28,115 - (3,204) 7,477 (159,437) 298,705 171,656
Called up share capital Share premium account Merger Capital contributions reserve Foreign exchange reserve* Retained earnings Total equity
reserve
$000 $000 $000 $000 $000 $000 $000
As at 1 January 2024 (audited) 28,115 - (3,204) 7,477 (146,549) 276,282 162,121
Profit for the period - - - - - 12,607 12,607
Other comprehensive income/(loss)
- exchange differences - - - - (8,901) - (8,901)
Total comprehensive income/(loss) - - - - (8,901) 12,607 3,706
As at 30 June 2024 (unaudited) 28,115 - (3,204) 7,477 (155,450) 288,889 165,827
* Predominantly as a result of exchange differences on retranslation, where
the subsidiaries' functional currency is not US Dollars
The Notes set out below are an integral part of these unaudited condensed
interim consolidated financial statements.
Condensed Interim Consolidated Statement of Cash Flows
6 months ended 6 months ended
30 Jun 25 30 Jun 24
(unaudited) (unaudited)
Note $000 $000
Operating activities
Cash generated from operations 13 (1,973) 21,321
Charitable donations - (3)
Income tax paid (1,248) (3,458)
Interest received 4,465 3,932
Net cash inflow from operating activities 1,244 21,792
Investing activities
Purchase of property, plant and equipment (922) (1,384)
Purchase of intangible assets (221) (134)
Proceeds from sale of property, plant and equipment 14 35
Net cash outflow from investing activities (1,129) (1,483)
Financing activities
Payment of principal portion of lease liabilities (15) (203)
Loans issued (1,778)
Loans received 1,834 -
Net cash inflow/(outflow) from financing activities 42 (203)
Net increase in cash and cash equivalents 156 20,106
Cash and cash equivalents at beginning of the period 12 99,398 76,493
ECL* of cash and cash equivalents - 329
Effect of foreign exchange rate changes 1,143 (4,084)
Cash and cash equivalents at end of the period 12 100,697 92,844
*ECL - Expected credit losses
The Notes set out below are an integral part of these unaudited condensed
interim consolidated financial statements.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
1. General Information and Operational Environment
Enwell Energy plc (the "Company") and its subsidiaries (together the "Group")
is a gas, condensate, oil and LPG production group.
The Company is a public limited company incorporated in England and Wales
under the Companies Act 2006, whose shares are quoted on the AIM Market of
London Stock Exchange plc. The Company's registered office is at 84 Brook
Street, London W1K 5EH, United Kingdom and its registered number is 4462555.
As at 30 June 2025, the Company's immediate parent company was Smart Energy
(CY) Limited, which was 100% owned by Smart Holding (Cyprus) Limited, which
was 100% owned by Proteas Trustees Ltd as trustee of the STEP Trust, and
Proteas Trustee Services Ltd, Afroditi Loukaidou, Elena Iona and Argyrou Vaso
as trustees of the SMART Trust. Accordingly, the Company was ultimately
controlled by Proteas Trustees Ltd as trustee of the STEP Trust, and Proteas
Trustee Services Ltd, Afroditi Loukaidou, Elena Iona and Argyrou Vaso as
trustees of the SMART Trust.
The Group's gas, condensate LPG and oil extraction and production facilities
are located in Ukraine.
Impact of the ongoing war in Ukraine
On 24 February 2022, Russia commenced a military invasion of Ukraine, and
since then there has been an ongoing war in Ukraine. Shortly after the
invasion, the Ukrainian Government imposed martial law, and the corresponding
introduction of related temporary restrictions that impact, amongst other
areas, the economic environment and business operations in Ukraine. The war
has caused significant economic and social challenges in Ukraine, which has
led to a deterioration of Ukrainian State finances, volatility of financial
markets, illiquidity on capital markets, higher inflation and a depreciation
of the national currency against major foreign currencies.
During 2022, the National Bank of Ukraine ("NBU") took a number of measures to
protect the Ukrainian economy, including significantly increasing its key
policy interest rate, introducing temporary restrictions on foreign currency
trades and limiting cross-border payments for non-critical imports and
repayment of debt to foreign creditors, apart from international institutions.
In addition, the Ukrainian Hryvnia exchange rate with the US Dollar was
effectively fixed on the foreign exchange market to ensure the stable
operation of Ukraine's financial system.
The NBU is now following an interest rate policy consistent with inflation
targets, and its key policy rate currently stands at 15.5%. The inflation rate
in Ukraine for the first half of 2025 was 6% (2024 year: 12%) according to the
statistics published by the State Statistics Service of Ukraine.
In October 2023, the NBU returned to a managed floating exchange rate for the
Ukrainian Hryvnia, and as of 30 June 2025, the Ukrainian Hryvnia exchange rate
with the US Dollar was UAH41.64/$1.00 (UAH42.04/$1.00 as at 31 December 2024).
During the first half of 2025, Ukrainian GDP increased by 1.3% compared with a
2.9% increase in the 2024 year.
The nature of the situation in Ukraine and the unpredictability of the outcome
means it is impracticable to assess the full impact of the war on the economic
environment.
Overall, the final resolution and the ongoing effects of the war and political
and economic situation in Ukraine are difficult to predict, but they may have
further severe effects on the Ukrainian economy and the Group's business.
As at 22 September 2025, the official NBU exchange rate of the Ukrainian
Hryvnia against the US Dollar was UAH41.25/$1.00, compared with UAH41.64/$1.00
as at 30 June 2025.
Further details of risks relating to Ukraine can be found within the Principal
Risks and Uncertainties section earlier in this announcement.
2. Accounting Judgements and Estimates
Basis of preparation
These unaudited condensed interim consolidated financial statements for the
six month period ended 30 June 2025 have been prepared in accordance with
UK-adopted International Accounting Standard 34, 'Interim Financial Reporting'
("IAS 34") and the AIM Rules for Companies. The accounting policies adopted
are consistent with those of the previous financial year and corresponding
interim reporting period.
These unaudited condensed interim consolidated financial statements do not
comprise statutory accounts within the meaning of section 434 of the Companies
Act 2006. Statutory accounts for the year ended 31 December 2024 were
approved by the Board of Directors on 20 June 2024 and subsequently filed with
the Registrar of Companies. The Auditors' Report on those accounts was not
qualified and did not contain any statement under section 498 of the Companies
Act 2006.
The unaudited condensed interim consolidated financial statements should be
read in conjunction with the annual consolidated financial statements for the
year ended 31 December 2024, which were prepared in accordance with UK-adopted
International Accounting Standards.
The accounting policies and methods of computation and presentation used are
consistent with those used in the Group's Annual Report and Financial
Statements for the year ended 31 December 2024, with the exception of the new
or revised standards and interpretations set out below.
Going Concern
The Group's business activities, together with the factors likely to affect
its future operations, performance and position are set out in the Chairman's
Statement, Chief Executive's Statement and Finance Review. The financial
position of the Group, its cash flows and liquidity position are set out in
these unaudited condensed interim consolidated financial statements.
On 24 February 2022, Russia commenced a military invasion of Ukraine, and
since then there has been an ongoing war between Russia and Ukraine.
Immediately after the commencement of the war, the Ukrainian Government
imposed martial law and introduced a number of related temporary restrictions
that impacted the economic environment and business operations in Ukraine.
While a number of restrictions remain in place, improvements in the economic
environment have led the Ukrainian Government to relax a number of the
restrictions and stabilise the economic situation in Ukraine.
The production assets of the Group are located in the central and eastern part
of the country (Poltava and Kharkiv regions) which are controlled by the
Ukrainian Government. As of the date of approval of these financial
statements, no assets of the Group have been damaged. However, the licences
relating to the Group's MEX-GOL and SV assets in the Poltava region and VAS
asset in the Kharkiv region are suspended after the State Geologic and Subsoil
Survey of Ukraine issued orders on 15 November 2024 for the suspension of the
MEX-GOL, SV and VAS production licences for a period of ten years effective
from 8 October 2024, and consequently all field and production operations on
these licences has ceased. No military activities have occurred at the Group's
field locations. The Gas Transmission System Operator of Ukraine has
maintained complete operational and technological control over the operations
of the Ukrainian Gas Transmission System. However, as of the date of approval
of these financial statements, the war and the regulatory actions of the
Ukrainian authorities has had, and continues to have, a material impact on the
production and sales levels of the business and execution of the Group's 2025
budget.
The Group has no debt and funds its operations from its own cash resources.
Cash and cash equivalents were $100.2 million as at 22 September 2025. The
Directors maintain a significant level of flexibility to modify the Group's
development plans as may be required to preserve cash resources for liquidity
management. Absent the potential impact of the war in Ukraine, the Directors
are satisfied that the Group and the Company are a going concern and will
continue their operations for the foreseeable future.
In assessing the impact of the war and the regulatory actions of the Ukrainian
authorities on the ability of the Group and the Company to continue as a going
concern, the Directors have analysed a number of possible scenarios of
economic and military developments and the impact on the expected cash flows
of the Group and Company for 2025 and 2026. This includes considering a
possible worst case scenario in which the Group has zero production as a
result of possible future military conflict and regulatory actions dictating
field operations being completely shut-in, and all other non-production
related costs being maintained at current levels with no reduction or
mitigating actions as would otherwise be possible. Even in this worst-case
scenario, the Directors are satisfied that the Group and the Company have
sufficient liquid resources to be able to meet their liabilities as they fall
due and to be able to continue as a going concern for the foreseeable future.
The corporate strategy for the near term is to:
• continue work for the development of the SC exploration licence area, and
moderating such development plans to reduce cash spend exposure whilst the war
and regulatory, operational and political uncertainty continues;
• vigorously pursue legal initiatives to protect the Group's assets, restore all
licences and production, and seek compensation for losses incurred to date and
as may be incurred in the future; and
• tightly manage costs to ensure cash resources are maintained at levels capable
of sustaining the business through the continuing uncertainty
In respect of the Group's operations, staff and assets in Ukraine, the
potential short and long-term impact of the future development of the war is
inherently uncertain. Accordingly, this creates a material uncertainty related
to events or conditions that may cast significant doubt on the Group's ability
to continue as a going concern because of the potential impact on its ability
to continue its operations for the foreseeable future and realise its assets
in the normal course of business. The financial statements do not include the
adjustments that would result if the Group were unable to continue as a going
concern.
The Company is a UK-based investment holding company. The Company had cash and
cash equivalents of $16.0 million as at 22 September 2025, all of which are
held outside of Ukraine, in US Dollars, Pounds Sterling and Euros. The
Directors are satisfied that the Company is a going concern and will be able
to continue its operations for the foreseeable future, and there is no
material uncertainty in respect of its ability to do so.
New and revised standards adopted by the Group
The Group has adopted the following new and revised standards for the first
time, effective for reporting periods beginning on or after 1 January 2024:
Amendments to IAS 1 Liabilities with Covenants
The amendments clarify the requirements for classifying liabilities in
financial statements if the implementation of covenants is related to events
after the reporting date. Now, liabilities related to covenants are classified
as non-current if all contractual terms are met at the reporting date, or if
the creditor provides a grace period to remedy covenant violations that lasts
at least 12 months after the reporting date. This allows entities to avoid
incorrect classification of liabilities that are not actually required to be
repaid immediately.
The amendments require retrospective application for all periods presented, if
practicable.
Since the Group has no liabilities with covenants, the Group's accounting
policies have not changed, no potential impacts on future periods are
expected, the amendments did not affect any items in the financial statements,
and there were no restatements for prior periods.
Amendments to IFRS 16 - Sale and Leaseback Liabilities
The amendments clarify the requirements for measuring lease liabilities in
sale and leaseback cases. In particular, the amendments require lease payments
to be determined in such a way that the amount of profit recognised
corresponds only to those rights that have been transferred to the lessor.
This is aimed to avoid misinterpretation in the event of changes in future
lease payments, especially if they include variable payments that are not
index or rate dependent. The amendments allow entities to increase
transparency in financial reporting and enhance compliance with the economic
substance of transactions.
The transitional provisions require retrospective application to all periods
presented.
Since these amendments relate to transactions that are absent in the Group's
activities, the Group's accounting policies have not changed, no potential
impacts on future periods are expected, the amendments did not affect any
items in the financial statements, and there were no restatements for prior
periods.
Amendments to IAS 7 and IFRS 7 - Supplier Financing Arrangements
The amendments clarify disclosure requirements for supplier financing
arrangements that allow companies to transfer their liabilities to suppliers
to financial institutions. The amendments are aimed at improving the
transparency of cash flow reporting, liability classification, and liquidity
risks. Disclosures are required to include the terms of such arrangements, the
range of payment periods, the amount of the liabilities, and the impact on
financial indicators.
The amendments require retrospective application to all periods presented.
Since these amendments relate to specific transactions that are absent in the
Group's activities, the Group's accounting policies have not changed, no
potential impacts on future periods are expected, the amendments did not
affect any items in the financial statements, and there were no restatements
for the prior periods.
New and revised IFRSs that have been issued but which have not yet entered
into force
In accordance with the requirements of IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors, the Group has considered all new and revised
standards that have been issued but which are not yet effective at the date of
preparation of these financial statements. The list of such standards and
amendments includes:
Standards and Interpretations Effective Date*
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates - Lack 1 January 2025
of Exchangeability
Renewable Energy Contracts (Amendments to IFRS 9 and IFRS 7) 1 January 2026
Annual Improvements to IFRS - Volume 11 1 January 2026
Amendments to the classification and measurement of financial instruments 1 January 2026
(amendments to IFRS 9 and IFRS 7)
*For annual reporting periods beginning on or after the Effective Date.
These new standards and interpretations are not expected to significantly
affect the Group's consolidated financial statements.
Significant accounting judgements and estimates
The preparation of the unaudited condensed interim consolidated financial
statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. Actual results may differ from
these estimates.
In preparing these unaudited condensed interim consolidated financial
statements, the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation uncertainty were
consistent with those that applied to the consolidated financial statements
for the year ended 31 December 2024 with certain updates described below.
Estimates
Depreciation of Development and Production Assets
Development and production assets held in property, plant and equipment are
depreciated on a unit of production basis at a rate calculated by reference to
proven and probable reserves at the end of the period plus the production in
the period, and incorporating the estimated future cost of developing and
extracting those reserves. Future development costs are estimated using
assumptions about the number of wells required to produce those reserves, the
cost of the wells, future production facilities and operating costs, together
with assumptions on oil and gas realisations, and are revised annually. The
reserves estimates used are determined using estimates of gas in place,
recovery factors, future hydrocarbon prices and also take into consideration
the Group's latest development plan for the associated development and
production asset. The latest development plan and therefore the inputs used to
determine the depreciation charge for the MEX-GOL, SV and VAS fields continue
until the end of the economic life of the fields, which is assessed to be
2038, 2042 and 2028 respectively, based on the assessment contained in the
DeGolyer & MacNaughton reserves report for these fields. The licences for
the MEX-GOL and SV fields have been extended until 2044. Were the estimated
reserves at the beginning of the year to differ by 10% from previous
assumptions, the impact on depreciation for the period ended 30 June 2025
would be to increase it by $31,000 or decrease it by $38,000 (31 December
2024: increase by $417,000 or decrease by $504,000).
3. Segmental Information
In line with the Group's internal reporting framework and management
structure, the key strategic and operating decisions are made by the Board of
Directors, who review internal monthly management reports, budgets and
forecast information as part of this process. Accordingly, the Board of
Directors is deemed to be the Chief Operating Decision Maker within the Group.
The Group's only class of business activity is oil and gas exploration,
development and production. The Group's operations are located in Ukraine,
with its head office in the United Kingdom. These geographical regions are the
basis on which the Group reports its segment information. The segment results
as presented represent operating profit before depreciation and amortisation.
6 months ended 30 June 2025 (unaudited)
Ukraine United Kingdom Total
$000 $000 $000
Revenue
Gas sales 2,287 - 2,287
Condensate sales 486 - 486
Oil 433 - 433
Other goods 189 - 189
Total revenue 3,395 - 3,395
Segment result 1,372 921 2,293
Depreciation and amortisation of non-current assets (1,302) (3) (1,305)
Operating profit 70 918 988
Segment assets 172,243 18,252 190,495
Capital additions* 1,143 - 1,143
*Comprises additions to property, plant and equipment and intangible assets
(Notes 8 and 9).
Year ended 31 December 2024 (audited)
Ukraine United Kingdom Total
2024 2024 2024
$000 $000 $000
Revenue
Gas sales 27,830 - 27,830
Condensate sales 11,153 - 11,153
Liquefied Petroleum Gas sales 5,521 - 5,521
Total revenue 44,928 - 44,928
Segment result 32,337 2,309 42,240
Depreciation and amortisation of non-current assets (5,534) (6) (5,540)
Operating profit 26,803 2,301 29,106
Segment assets 173,359 17,649 191,008
Capital additions* 3,660 - 3,660
*Comprises additions to property, plant and equipment and intangible assets
(Notes 8 and 9).
6 months ended 30 June 2024 (unaudited)
Ukraine United Kingdom Total
$000 $000 $000
Revenue
Gas sales 13,679 - 13,679
Condensate sales 6,238 - 6,238
Liquefied Petroleum Gas sales 3,781 - 3,781
Total revenue 23,698 - 23,698
Segment result 20,455 (758) 19,697
Depreciation and amortisation of non-current assets (2,831) - (2,831)
Operating profit 17,624 (758) 16,866
Segment assets 166,291 19,986 186,277
Capital additions* 983 - 983
*Comprises additions to property, plant and equipment and intangible assets
(Notes 8 and 9).
There are no inter-segment sales within the Group and all products are sold in
the geographical region in which they are produced. The Group is not
significantly impacted by seasonality.
4. Cost of Sales
6 months ended 6 months ended
30 Jun 25 30 Jun 24
(unaudited) (unaudited)
$000 $000
Production taxes 600 2,319
Depreciation of property, plant and equipment 365 2,413
Staff costs 309 913
Cost of inventories recognised as an expense 243 812
Amortisation of mineral reserves 158 168
Transmission tariff for Ukrainian gas system 77 138
Rent expenses 8 809
Other expenses 271 580
2,031 8,152
5. Other operating gains, (net)
6 months ended 6 months ended
30 Jun 25 30 Jun 24
(unaudited) (unaudited)
$000 $000
Interest income on cash and cash equivalents 4,465 3,932
Staff costs (1,033) -
Depreciation and amortization (505) -
Foreign exchange gain 192 -
Reversal of accruals - 94
Other operating (losses), net (624) (341)
2,495 3,685
6. Taxation
The income tax charge of $2,030,000 for the six month period ended 30 June
2025 relates to a сurrent tax charge of $387,000 and a deferred tax charge of
$1,643,000 (1H 2024: current tax charge of $3,060,000 and deferred tax charge
of $1,137,000).
The movement in the period was as follows:
6 months ended 6 months ended
30 Jun 25 30 Jun 24
(unaudited) (unaudited)
$000 $000
Deferred tax (liability)/asset recognised relating to oil and gas development
and production assets at MEX-GOL-SV fields and provision for decommissioning
At beginning of the period (5,796) (4,976)
Charged to Income Statement - current period (1,680) (1,821)
Effect of exchange difference 76 381
At end of the period (7,400) (6,416)
Deferred tax asset/(liability) recognised relating to oil and gas development
and production assets at VAS field and provision for decommissioning
At beginning of the period 363 352
Credited to Income Statement - current period 33 685
Effect of exchange difference 3 (48)
At end of the period 399 989
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to the expected total annual profit or loss. The effective
tax rate for the six month period ended 30 June 2025 was 25% (1H 2024: 25%).
The deferred tax asset relating to the Group's provision for decommissioning
at 30 June 2025 of $669,000 (31 December 2024: $615,000) was recognised on
the tax effect of the temporary differences of the Group's provision for
decommissioning at the MEX-GOL and SV fields, and its tax base. The deferred
tax liability relating to the Group's development and production assets at the
MEX-GOL and SV fields at 30 June 2025 of $8,069,000 (31 December 2024:
$6,411,000) was recognised on the tax effect of the temporary differences
between the carrying value of the Group's development and production asset at
the MEX-GOL and SV fields, and its tax base.
The deferred tax asset relating to the Group's provision for decommissioning
at 30 June 2025 of $366,000 (31 December 2024: $355,000) was recognised on
the tax effect of the temporary differences on the Group's provision on
decommissioning at the VAS field, and its tax base. The deferred tax asset
relating to the Group's development and production assets at the VAS field at
30 June 2025 of $33,000 (31 December 2024: $8,000) was recognised on the tax
effect of the temporary differences between the carrying value of the Group's
development and production asset at the VAS field, and its tax base.
7. Earnings per Share
The calculation of basic earnings per ordinary share has been based on the
loss for the six-month period ended 30 June 2025 and 320,637,836 (30 June
2024: 320,637,836) ordinary shares, being the weighted average number of
shares in issue for the period. There are no dilutive instruments.
8. Property, Plant and Equipment
6 months ended 30 Jun 25 6 months ended 30 Jun 24
(unaudited) (unaudited)
Oil and gas development and production assets Oil and gas exploration and evaluation assets Other Total Oil and gas development and production assets Oil and gas exploration and evaluation assets Other Total
Ukraine fixed Ukraine fixed
assets assets
$000 $000 $000 $000 $000 $000 $000 $000
Cost
At beginning of the period 132,674 12,939 1,992 147,605 141,902 13,944 2,181 158,027
Additions 629 260 34 923 488 196 164 848
Transfer (1) 1 - - - - - -
Disposals (20) (3) (37) (60) (49) - (166) (215)
Exchange differences 1,259 125 21 1,405 (8,766) (888) (136) (9,790)
At end of the period 134,541 13,322 2,010 149,873 133,575 13,252 2,043 148,870
Accumulated depreciation and impairment
At beginning of the period 72,544 1,478 1,500 75,522 75,619 1,635 1,496 78,750
Charge for the period 791 - 66 857 2,392 - 104 2,496
Disposals (23) - (10) (33) (44) - (43) (87)
Exchange differences 695 15 15 725 (4,855) (103) (98) (5,056)
At end of the period 74,007 1,493 1,571 77,071 73,112 1,532 1,459 76,103
Net book value at the beginning of the period 60,130 11,461 492 72,083 66,283 12,309 685 79,277
Net book value at the end of the period 60,534 11,829 439 72,802 60,463 11,720 584 72,767
At 30 June 2025, an impairment indicator was identified by the Group, and
impairment tests were performed for the MEX-GOL, SV, SC and VAS fields. These
reviews concluded that no impairment to carrying value had occurred on any
Group asset.
9. Intangible Assets
6 months ended 30 Jun 25 6 months ended 30 Jun 24
(unaudited) (unaudited)
Mineral reserve rights Exploration and evaluation intangible assets Other intangible assets Total Mineral reserve rights Exploration and evaluation intangible assets Other intangible assets Total
$000 $000 $000 $000 $000 $000 $000 $000
Cost
At beginning of the period 4,419 5,585 1,025 11,029 4,891 6,190 914 11,995
Additions - - 221 221 - - 134 134
Disposals - - (77) (77) - - (45) (45)
Exchange differences 42 54 20 116 (308) (395) (57) (760)
At end of the period 4,461 5,640 1,188 11,289 4,583 5,795 946 11,324
Accumulated amortisation
and impairment
At beginning of the period 3,169 - 543 3,712 3,162 - 461 3,623
Amortisation charge for the period 158 - 142 300 162 - 86 248
Disposals - - (77) (77) - - (35) (35)
Exchange differences 30 - 7 37 (200) - (36) (236)
At end of the period 3,357 - 615 3,972 3,124 - 476 3,600
Net book value at the beginning of the period 1,250 5,585 482 7,317 1,729 6,190 453 8,372
Net book value at the end of the period 1,104 5,640 573 7,317 1,459 5,795 470 7,724
Intangible assets consist mainly of the hydrocarbon production licence
relating to the VAS gas and condensate field, which is held by LLC Prom-Enerho
Produkt, and the SC hydrocarbon exploration licence, which is held by LLC
Arkona Gas-Energy. The Group amortises the hydrocarbon production licence
relating to the VAS field using the straight-line method over the term of the
economic life of the VAS field until 2028. The SC hydrocarbon exploration
licence is not amortised due to it being at an exploration and evaluation
stage.
As at 30 June 2025, an impairment indicator was identified by the Group, and
impairment tests were performed for the MEX-GOL, SV, SC and VAS fields. These
reviews concluded that no impairment to carrying value had occurred on any
Group asset.
10. Trade and Other Receivables
30 Jun 25 31 Dec 24
(unaudited) (audited)
$000 $000
Trade receivables - 2,951
Accounts receivable from accrued income 398 355
Other financial receivables 1,370 1,308
Less credit loss allowance - (134)
Total financial receivables 1,768 4,480
Prepayments and accrued income 378 655
Other receivables 4,127 3,057
Less credit loss allowance (591) (554)
Total trade and other receivables 5,682 7,648
Due to the short-term nature of the trade and other financial receivables,
their carrying amount is assumed to be the same as their fair value. All trade
and other financial receivables, except those provided for, are considered to
be of high credit quality.
As at 30 June 2025 and 31 December 2024, the Group's total trade receivables
were denominated in Ukrainian Hryvnia.
11. Provision for Decommissioning
6 months ended 6 months ended
30 Jun 25 31 Dec 24
(unaudited) (audited)
$000 $000
At the beginning of the period 8,276 7,305
Unwinding of discount 195 323
Change in estimate - 1,432
Effect of exchange difference 79 (784)
At the end of the period 8,550 8,276
The provision for decommissioning is based on the net present value of the
Group's estimated liability for the removal of the Ukrainian production
facilities and well site restoration at the end of production life.
The non-current provision of $8,550,000 (31 December 2024: $8,276,000)
represents a provision for the decommissioning of the Group's MEX-GOL, SV, VAS
and SC production and exploration facilities, including site restoration. None
of the provision was utilised during the reporting period.
12. Financial Instruments
The Group's financial instruments comprise cash and cash equivalents and
various items such as debtors and creditors that arise directly from its
operations. The Group has bank accounts denominated in British Pounds, US
Dollars, Euros and Ukrainian Hryvnia. The main future risks arising from the
Group's financial instruments are currency risk, interest rate risk, liquidity
risk and credit risk.
The Group's financial assets and financial liabilities, measured at amortised
cost, which approximates their fair value, comprise the following:
30 Jun 25 31 Dec 24
(unaudited) (audited)
$000 $000
Financial assets
Cash and cash equivalents 100,697 99,398
Trade and other receivables 1,768 4,125
Non-current receivables 52 51
102,517 103,573
Financial liabilities
Loans 276 -
Lease liabilities 689 835
Trade and other payables 265 315
Other financial liabilities 655 655
1,885 1,805
At 30 June 2025, the Group held cash and cash equivalents in the following
currencies:
30 Jun 25 (unaudited) 31 Dec 24
(audited)
$000 $000
Ukrainian Hryvnia 84,126 83,026
US Dollars 15,368 15,954
Euros 283 247
British Pounds 920 171
100,697 99,398
All of the cash and cash equivalents held in Ukrainian Hryvnia are held in
banks within Ukraine, and all other cash and cash equivalents are held in
banks within Europe, Ukraine and the United Kingdom.
13. Reconciliation of Operating Profit to Operating Cash Flow
6 months ended 6 months ended
30 Jun 25 30 Jun 24
(unaudited) (unaudited)
$000 $000
Operating profit 988 16,866
Depreciation and amortisation 1,286 3,087
Less interest income recorded within operating profit (4,465) (3,932)
Fines and penalties paid 2 41
Net (gain) on sale of non-current assets (14) (35)
(Increase) in provisions - (329)
Increase/(decrease) in inventory 193 (442)
Decrease in receivables 1,954 7,811
(Decrease) in payables (1,917) (1,746)
Cash generated from operations (1,973) 21,321
14. Contingencies and Commitments
Amounts related to works contracted in relation to the Group's 2025 investment
programme at the MEX-GOL, SV, VAS and SC gas and condensate fields in Ukraine,
but not provided for in the unaudited condensed interim consolidated financial
statements at 30 June 2025, were $0 related to Oil and Gas Exploration and
Evaluation assets and $247,131 related to Oil and Gas Development and
Production assets (31 December 2024: $0 and $461,587 respectively).
15. Related Party Disclosures
Key management personnel of the Group are considered to comprise only the
Directors. Remuneration of the Directors for the six month period ended 30
June 2025 was $441,100 (1H 2024: $934,311, and year ended 31 December 2024:
$1,632,000).
During the period, Group companies entered into the following transactions
with related parties which are not members of the Group:
6 months ended 6 months ended
30 Jun 25 30 Jun 24
(unaudited) (unaudited)
$000 $000
Sale of goods/services 208 -
Purchase of goods/services (390) (360)
Loans made to related parties 1,778 -
Loans received from related parties (1,834) -
Interest (12) -
All related party transactions were with subsidiaries of the ultimate Parent
Company, and primarily relate to inter-group loans, as well as the sale of
gas, the rental of office facilities and a vehicle and the sale of equipment.
The amounts outstanding have been or will be settled in cash.
In the period, the Group made loans to and received loans from subsidiaries of
the ultimate Parent Company . These loans are nominated in Great British
Pounds with the maturity date of March 2028. The full value of the loans in
the period are as stated above and remained outstanding in accordance with
their terms, at period end.
At the period end, the balance of trade receivables due from related parties
was $271,000 (1H 2024: $11,000); and the balance of trade payables due to
related parties was $67,000 (1H 2024: $70,000).
At the date of this announcement, none of the Company's controlling parties
prepares consolidated financial statements available for public use.
16. Events occurring after the Reporting Period
The ongoing war in Ukraine means that the fiscal, economic and humanitarian
situation in Ukraine is unstable and extremely challenging and the final
resolution and consequences of the ongoing war are hard to predict, but they
may have a further serious impact on the Ukrainian economy and business of the
Group. Management continues to identify and mitigate, where possible, the
impact on the Group, but the majority of these factors are beyond their
control, including the duration and severity of the war, as well as the
further actions of various governments and diplomacy.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR MZGZLNLFGKZMRecent news on Enwell Energy
See all newsREG - Enwell Energy PLC - 2025 INTERIM RESULTS
AnnouncementREG - Enwell Energy PLC - Holding(s) in Company
AnnouncementREG - Enwell Energy PLC - Holding(s) in Company
AnnouncementREG - Enwell Energy PLC - Commencement of Arbitration Proceedings
AnnouncementREG - Enwell Energy PLC - Results of Annual General Meeting
Announcement